Calculating volume on a broker account

[graemenash]

My trading approach uses fibonacci levels to define trade entry levels and also where to position my stops. I risk 3% of my account on each trade, but because the size of my stops vary, it means I have to take different trades at different volumes to ensure that the risk is never greater than 3%. For example if the stop is 50 pips away, my volume is X, but if I have to place the stop 100 pips away then my volume has to be half X, to ensure that the risk is the same. This means that I have to trade pretty specific amounts, such as £2.61/point or £4.43/point and so on.

I swing trade through an IG Index spreadbetting account, because I can just place the orders at the levels I want and the volume I want and walk away. The problem with this is that if you hold positions for long enough, the rollover costs really start to do you in. I have a short AUDUSD position that I've held for just over a week, and I've already given back over 36% of my profits to date in rollover costs.

I've tried to trade this approach through a broker (Saxo) but I found that it's impossible to calculate the correct volume for the trade right up until the second the order is hit, because you have to perform a time-consuming calculation. If you're trading EURUSD for example, you have to multiply the EURUSD rate by the GBPEUR rate at the moment the order is hit, and then do further calculations on that number based on stop size and % risk and so on.

Basically my question then would be is there a simple way to trade exact volumes on a broker account even when placing the orders several hours in advance? Hopefully there's some completely simple way to do it that I've overlooked

Thanks for any help.

 

[arabianights]

Why on earth are you being so anal about risking 3%? That kind of precision makes no sense especially in a strategy involving imprecise concepts like fibbonacci levels.

The easiest way to do what you suggest would probably to have an account in euros, an account in dollars, etc etc. Then you can risk three percent of each of these accounts... But honestly there's nothing magical about the number 3. There's a java kelly criterion simulator on the internet somewhere you may find interesting.

 

[graemenash]

Why on earth are you being so anal about risking 3%? That kind of precision makes no sense especially in a strategy involving imprecise concepts like fibbonacci levels.

The easiest way to do what you suggest would probably to have an account in euros, an account in dollars, etc etc. Then you can risk three percent of each of these accounts... But honestly there's nothing magical about the number 3. There's a java kelly criterion simulator on the internet somewhere you may find interesting.

To be honest mate I think you're a bit out of order to accuse me of being anal and nonsensical when the fact is you know next to nothing about my approach. Even the fact that I use fib levels could mean a hundred different things.

For what it's worth, 3% per trade is a level of risk I'm comfortable with. It ensures I never suffer bad drawdowns, it eliminates 99% of the psychology of fear from my trading but also still allows me to achieve my monthly targets as a result of good risk/reward ratios.

I trade a pretty specific system; I treat every trade I take as having the same probability of success, therefore it's logical to me to ensure that the risk is the same on every trade too.

None of that's really relevant though, as the original question is the same regardless of whether I'm trying to risk 3%, 5% or 50%. I just want to know if there's a way to achieve such precision with a broker account rather than spreadbetting

 

[arabianights]

To be honest mate I think you're a bit out of order to accuse me of being anal and nonsensical when the fact is you know next to nothing about my approach. Even the fact that I use fib levels could mean a hundred different things.

For what it's worth, 3% per trade is a level of risk I'm comfortable with. It ensures I never suffer bad drawdowns, it eliminates 99% of the psychology of fear from my trading but also still allows me to achieve my monthly targets as a result of good risk/reward ratios.

I trade a pretty specific system; I treat every trade I take as having the same probability of success, therefore it's logical to me to ensure that the risk is the same on every trade too.

None of that's really relevant though, as the original question is the same regardless of whether I'm trying to risk 3%, 5% or 50%. I just want to know if there's a way to achieve such precision with a broker account rather than spreadbetting

Hey, chill, meant in jest

I'll bump this for some guys who know more about this than me.

 

[graemenash]

Hey, chill, meant in jest

I'll bump this for some guys who know more about this than me.

Fair enough

Cheers...

 

[Rhody Trader]

Firstly, your use of the term "volume" is incorrect. Volume in trading is a term used specifically in regards to transactions executed in the market as a whole. What you are talking about is position size.

Secondly, if your position sizing is based on a second exchange rate beyond the one you are trading, you will not be able do anything but approximate ahead of time.

The fact of the matter is, however, that it doesn't matter. You'll never lock your risk or P/L in to a specific value because the GBP/EUR rate will always be changing. That's the tricky part about cross rate trading - meaning trading in a pair which doesn't include your account base currency.

 

[graemenash]

Secondly, if your position sizing is based on a second exchange rate beyond the one you are trading, you will not be able do anything but approximate ahead of time.

Thanks mate, I suspected as much unfortunately

Rollover in a SB account wouldn't be too bad if it weren't for the weekend spreads, I guess I'll have to adjust my trading to make allowances.